Iceland desperate for funds to protect its natural tourism attractions

ICELAND (eTN) – Some of Iceland’s most famous natural attractions are under threat of permanent damage made by local and foreign visitors due to lack of funds for visitor management. New visitor arrival/departure tax, hotel tax, entrance and service fees at attractions have been proposed as a way to collect money to fix the problem. The issue has been debated for over a decade without resolve.

The Icelandic state and other stakeholders grapple each other for money which is desperately needed in order to protect the country’s vulnerable nature and to provide essential services to the growing number of visitors.

Traditionally the state has been reluctant to spend money on tourism infrastructure and even more so after the economic collapse in 2008. Most stakeholders seem to agree that if the State doesn’t fund improvements then the visitor must. The actual implementation is more controversial.

“Ideally it would be best if the state ploughed some of its income from tourism back into tourism,” said Ursula Spitzbart founder of Reykjavik Bike Tours. Her bicycle tour company offers tours which include attraction entrance fee candidates Gullfoss waterfall, Geysir Geothermal area, and National park Thingvellir. “Surely the state makes enough money from the 600,000 foreign visitors who visit the country each year to be able to pay for toilet facilities and general maintenance at visitor attractions in Iceland.”

The Ministry of Industry, Energy and Tourism currently explores ways to generate funds for visitor management. One idea the ministry came up with was to let hotel guest pay tax for each night. The Iceland Tour Operator Association (ITOA) strongly opposed this idea. Many of its members belong to the hospitality industry.

“It’s time to start charging visitors,” said Olafur Orn Haraldsson chief park ranger of Thingvellir national park was quoted in Frettabladid newspaper last week. Haraldsson suggested those who benefit financially from bringing guests into the park should pay ‘service fee’ of US$2-3 per person. The Iceland Tour Operator Association opposes all taxes and fees that only apply to the trade and not to the general public. Visitors to national parks and protected areas in Iceland have until now been exempt from charges in spite of the fact a law was passed in 1996 which allows visitors to be charged.

An arrival or departure tax has been proposed which would be applicable to all who travel to the country by sea or air. “An environmental tax is already in place in the airline industry in Europe and the amount depends on the distance travelled. A modest arrival or departure tax in the region of 4 US$ per person would be adequate to improve the poor situation at visitor attractions in Iceland,” said Thorir Gardarsson the sales and marketing manager of Iceland Excursions – Iceland’s largest tour operator. On a precautionary note he added, “The money, regardless of how it’s collected, must be used for what it is intended for, i.e., improvements at visitor attractions, not the government’s environmental pet projects.”

Timely notice of new taxes, service fees and charges is of utmost importance to the travel trade, especially tour operators who depend on a sales network. “We publish our prices 18 months in advance to wholesalers, DMCs, travel agents and information centers. In order to publish the correct price we need to be aware of additional costs at least 18 months in advance,” said Spitzbart.

One discreet idea is to discontinue the current tax-refund scheme for foreign tourists and use a part of the value added tax (VAT) to pay for conservation and basic facilities at tourist attractions. Present level of VAT stands at 25 percent and tax-refund at 15 percent. Surely shopkeepers would object to the idea if it was to be pitched publicly.

It’s clear that much more money must be spent on conservation and preservation of natural attractions in Iceland than in the past. In the light of current economic situation it seems that the visitor will be footing the bill in one way or another. Feasible options mentioned in the current debate include arrival/departure tax, service fee and entrance fee at attractions.